Buy Shree Pushkar Chemicals; target of Rs 270: SPA Securities

SPA Securities is bullish on Shree Pushkar Chemicals has recommended buy rating on the stock with a target price of Rs 270 in its research report dated February 26, 2018.

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April 05, 2018 / 17:39 IST

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SPA Securities' research report on Shree Pushkar Chemicals

Shree Pushkar Chemicals & Fertilizers (SPCF) reported strong ~35%/39% YoY growth in Q3FY18 revenue/PAT driven by increased contribution of dyestuff segment (~26% of revenue). Additional dyestuff capacity of 3000 MTPA has been commissioned in Q3FY18. Recent acquisition of Kisan Phosphates business will help in expanding geographical presence in fertilizer segment. We maintain buy rating on the stock with target price of INR 270 valuing core business at 15x of FY19E earning.

Outlook

We estimate revenue/PAT CAGR of ~26%/35% between FY17-FY19E majorly on account of additional dyestuff capacity of 6000 MTPA. We expect prices of intermediates to go up in coming quarters on account of China factor which will help dye industry. SPCF has started marketing and trading of Auxillary chemicals and plans to foray in it once significant order book is built up. Acquisition of Kisan Phosphates is expected to add revenues of INR +400 mn (~10% of SPFC revenue). We have not included it in our projections for FY19E. We retain buy rating on the stock with new target price of INR 270 in next 12-15 months valuing core business at 15x of FY19E earnings.For all recommendations report, click here

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